Correlation Between Virtus Seix and Banking Fund

Can any of the company-specific risk be diversified away by investing in both Virtus Seix and Banking Fund at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Virtus Seix and Banking Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Virtus Seix Government and Banking Fund Class, you can compare the effects of market volatilities on Virtus Seix and Banking Fund and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Virtus Seix with a short position of Banking Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Seix and Banking Fund.

Diversification Opportunities for Virtus Seix and Banking Fund

0.63

Correlation Coefficient

Virtus Seix  Banking Fund

Poor diversification

The 3 months correlation between Virtus and Banking is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Seix Government and Banking Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banking Fund Class and Virtus Seix is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Virtus Seix Government are associated (or correlated) with Banking Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banking Fund Class has no effect on the direction of Virtus Seix i.e., Virtus Seix and Banking Fund go up and down completely randomly.

Pair Corralation between Virtus Seix and Banking Fund

Assuming the 90 days horizon Virtus Seix Government is not expected to generate positive returns. However, Virtus Seix Government is 31.67 times less risky than Banking Fund. It waists most of its returns potential to compensate for thr risk taken. Banking Fund is generating about -0.39 per unit of risk. If you would invest  988.00  in Virtus Seix Government on September 25, 2024 and sell it today you would earn a total of  0.00  from holding Virtus Seix Government or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Virtus Seix Government  vs.  Banking Fund Class

Virtus Seix Government

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Seix Government are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Virtus Seix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Banking Fund Class

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Banking Fund Class are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Banking Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Virtus Seix and Banking Fund

The main advantage of trading using opposite Virtus Seix and Banking Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Seix position performs unexpectedly, Banking Fund can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Banking Fund will offset losses from the drop in Banking Fund's long position.

The idea behind Virtus Seix Government and Banking Fund Class pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.